Accor to focus on hotels and services, looks toward restructuring

Thursday, October 23, 2008：Despite its profit downgrade, Accor has just announced that it will be refocusing on its two main operations of Hotels and Services, while 600 properties could be up for “restructuring” in its continual asset pursuit.

Thursday, October 23, 2008：Despite its profit downgrade, Accor has just announced that it will be refocusing on its two main operations of Hotels and Services, while 600 properties could be up for “restructuring” in its continual asset pursuit.

With many global companies tightening the belt in this current environment of economic uncertainty, French hospitality group Accor has just announced that it will immediately implement a EUR75 million cost saving program, the details of which are still to be revealed.

“Over the next two years, Accor will pursue the transformation of the hotel business model to make it more resilient and more cash generative, as well as the transformation of Services to speed up the growth through a business model based on prepaid electronic media and conquest of new markets,” said the group in a statement.

In the hotel sector, the group will look to further rebranding its properties to highlight the different segments after the successful introduction of Pullman and All Seasons as well as the repositioning of Sofitel.

“Today, 55% of the network is operated under management contracts, franchise agreements or variable leases versus 35% in 2004. The objective is to reduce volatility in cash flow streams and optimize overall return on capital employed,” says Accor.

Part of its asset right strategy, 600 properties have been identified for possible restructuring. This will eventuate in some 77% of the network to be operated through management, franchise or other leases with less capital intensity.

“The expansion plan is playing a key role as a driver for future profit,” the company continues. “The 200,000-room plan will be completed in 2011. Accor expects to open an average 40,000 rooms a year once cruising speed is reached in 2010, following on from the 155,000 rooms opened over the 2006-2010 period.”

Accor’s service sector has attributed on average an 18.5% annual increase in revenue with accelerations still expected.